Note J. Pension Plans and Other Retirement Benefits

Pension: TJX has a funded defined benefit retirement plan which covers a majority of its full-time U.S. employees hired prior to February 1, 2006. As a result of an amendment to the plan, employees hired on or after February 1, 2006 do not participate in this plan but are eligible to receive enhanced employer contributions to their 401(k) plans. This plan amendment has not had a material impact on pension expense in the periods presented, but is expected to reduce net periodic pension costs gradually due to a reduction in the number of participants. Eligible employees who had attained twenty-one years of age and completed one year of service, remain covered under the plan. No employee contributions are required, and benefits are based principally on compensation earned in each year of service. Our funded defined benefit retirement plan assets are invested in domestic and international equity and fixed income securities, both directly and through investment funds. The plan does not invest in the securities of TJX. TJX also has an unfunded supplemental retirement plan which covers certain key employees and provides additional retirement benefits based on average compensation for certain of those employees or, alternatively based on benefits that would be provided under the funded retirement plan absent Internal Revenue Code limitations.

Presented below is financial information relating to TJX's funded defined benefit retirement plan (funded plan) and its unfunded supplemental pension plan (unfunded plan) for the fiscal years indicated:


	Funded Plan Fiscal Year Ended						Unfunded Plan Fiscal Year Ended
In thousands	January 28, 2012			January 29, 2011			January 28, 2012			January 29, 2011
Change in projected benefit obligation:
Projected benefit obligation at beginning of year	$	666,356		$	580,203		$	49,526		$	51,727
Service cost		33,858			32,142			1,188			1,202
Interest cost		38,567			34,429			2,410			2,682
Actuarial losses (gains)		128,154			34,246			3,582			(2,727	)
Settlements		—			—			—			—
Benefits paid		(14,151	)		(12,662	)		(3,355	)		(3,358	)
Expenses paid		(2,097	)		(2,002	)		—			—
Projected benefit obligation at end of year	$	850,687		$	666,356		$	53,351		$	49,526
Accumulated benefit obligation at end of year	$	785,402		$	614,584		$	46,775		$	43,229


	Funded Plan Fiscal Year Ended						Unfunded Plan Fiscal Year Ended
In thousands	January 28, 2012			January 29, 2011			January 28, 2012			January 29, 2011
Change in plan assets:
Fair value of plan assets at beginning of year	$	663,591		$	508,420		$	—		$	—
Actual return on plan assets		28,454			69,835			—			—
Employer contribution		75,000			100,000			3,355			3,358
Benefits paid		(14,151	)		(12,662	)		(3,355	)		(3,358	)
Settlements		—			—			—			—
Expenses paid		(2,097	)		(2,002	)		—			—
Fair value of plan assets at end of year	$	750,797		$	663,591		$	—		$	—
Reconciliation of funded status:
Projected benefit obligation at end of year	$	850,687		$	666,356		$	53,351		$	49,526
Fair value of plan assets at end of year		750,797			663,591			—			—
Funded status—excess obligation	$	99,890		$	2,765		$	53,351		$	49,526
Net liability recognized on consolidated balance sheets	$	99,890		$	2,765		$	53,351		$	49,526
Amounts not yet reflected in net periodic benefit cost and included in accumulated other comprehensive income (loss):
Prior service cost	$	—		$	—		$	8		$	12
Accumulated actuarial losses		286,939			149,034			12,400			9,483
Amounts included in accumulated other comprehensive income (loss)	$	286,939		$	149,034		$	12,408		$	9,495

The consolidated balance sheets reflect the funded status of the plans with any unrecognized prior service cost and actuarial gains and losses recorded in accumulated other comprehensive income (loss). The combined net accrued liability of $153.2 million at January 28, 2012 is reflected on the balance sheet as of that date as a current liability of $2.4 million and a long-term liability of $150.8 million.

The combined net accrued liability of $52.3 million at January 29, 2011 is reflected on the balance sheet as of that date as a current liability of $2.8 million and a long-term liability of $49.5 million.

The estimated prior service cost that will be amortized from accumulated other comprehensive income (loss) into net periodic benefit cost in fiscal 2013 for both the funded and unfunded plan is immaterial. The estimated net actuarial loss that will be amortized from accumulated other comprehensive income (loss) into net periodic benefit cost in fiscal 2013 is $24.9 million for the funded plan and $2.0 million for the unfunded plan.

Weighted average assumptions for measurement purposes for determining the obligation at the year end measurement date:

Funded Plan

Fiscal Year Ended

Unfunded Plan

Fiscal Year Ended

January 28,
2012

January 29,
2011

January 28,
2012

January 29,
2011

Discount rate

4.80%

5.75%

4.40%

5.25%

Rate of compensation increase

4.00%

4.00%

6.00%

6.00%

At January 28, 2012 TJX changed its method for determining its discount rate by using the RATE: Link model which TJX believes provides a more reasonable discount rate. For fiscal 2011 and prior we used the Citigroup Pension Liability Index.

TJX made aggregate cash contributions of $78.4 million in fiscal 2012, $103.4 million in fiscal 2011 and $147.9 million in fiscal 2010 to the defined benefit retirement plan and to fund current benefit and expense payments under the unfunded plan. TJX's policy with respect to the qualified defined benefit plan is to fund, at a minimum, the amount required to maintain a funded status of 80% of the applicable pension liability (the Funding Target) or such other amount sufficient to avoid restrictions with respect to the funding of nonqualified plans under the Internal Revenue Code. As a result of funding in fiscal 2012, we do not anticipate any required funding in fiscal 2013 for the defined benefit retirement plan. We anticipate making contributions of $3.4 million to fund current benefit and expense payments under the unfunded plan in fiscal 2013.

The following are the components of net periodic benefit cost and other amounts recognized in other comprehensive income related to our pension plans:


	Funded Plan Fiscal Year Ended									Unfunded Plan Fiscal Year Ended
Dollars in thousands	January 28, 2012			January 29, 2011			January 30, 2010			January 28, 2012			January 29, 2011			January 30, 2010
Net periodic pension cost:
Service cost	$	33,858		$	32,142		$	30,049		$	1,188		$	1,202		$	876
Interest cost		38,567			34,429			31,320			2,410			2,682			2,923
Expected return on plan assets		(49,059	)		(40,043	)		(28,222	)		—			—			—
Settlement costs		—			—			—			—			—			2,447
Amortization of prior service cost		—			—			15			4			81			125
Amortization of net actuarial loss		10,854			11,172			13,656			666			941			1,045
Net periodic pension cost	$	34,220		$	37,700		$	46,818		$	4,268		$	4,906		$	7,416
Other changes in plan assets and benefit obligations recognized in other comprehensive income:
Net (gain) loss	$	148,759		$	4,454		$	(6,866	)	$	3,582		$	(2,727	)	$	7,686
Settlement costs		—			—			—			—			—			(2,447	)
Amortization of net (loss)		(10,854	)		(11,172	)		(13,656	)		(666	)		(941	)		(1,045	)
Amortization of prior service cost		—			—			(15	)		(4	)		(81	)		(125	)
Total recognized in other comprehensive income	$	137,905		$	(6,718	)	$	(20,537	)	$	2,912		$	(3,749	)	$	4,069
Total recognized in net periodic benefit cost and other comprehensive income	$	172,125		$	30,982		$	26,281		$	7,180		$	1,157		$	11,485
Weighted average assumptions for expense purposes:
Discount rate		5.75%			6.00%			6.50%			5.25%			5.75%			6.50%
Expected rate of return on plan assets		7.50%			8.00%			8.00%			N/A			N/A			N/A
Rate of compensation increase		4.00%			4.00%			4.00%			6.00%			6.00%			6.00%

TJX develops its long-term rate of return assumption by evaluating input from professional advisors taking into account the asset allocation of the portfolio and long-term asset class return expectations, as well as long-term inflation assumptions.

The unrecognized gains and losses in excess of 10% of the projected benefit obligation are amortized over the average remaining service life of participants. In addition, for the unfunded plan, unrecognized actuarial gains and losses that exceed 30% of the projected benefit obligation are fully recognized in net periodic pension cost.

The following is a schedule of the benefits expected to be paid in each of the next five fiscal years and in the aggregate for the five fiscal years thereafter:


In thousands	Funded Plan Expected Benefit Payments	Unfunded Plan Expected Benefit Payments
Fiscal Year
2013	$ 20,849	$ 3,421
2014	23,260	3,141
2015	25,854	3,089
2016	28,730	2,110
2017	32,027	4,206
2018 through 2022	214,986	20,137

The following table presents the fair value hierarchy for pension and postretirement assets measured at fair value on a recurring basis as of January 28, 2012:


	Funded Plan
In thousands	Level 1		Level 2		Level 3		Total
Asset category:
Short-term investments	$	82,220	$	—	$	—	$	82,220
Equity Securities:
Domestic equity		98,386		—		—		98,386
International equity		44,679		—		—		44,679
Fixed Income Securities:
Corporate and government bond funds		—		31,349		—		31,349
Common/Collective Trusts		—		467,346		14,775		482,121
Limited Partnerships		—		—		12,042		12,042
Fair value of plan assets	$	225,285	$	498,695	$	26,817	$	750,797

The following table presents the fair value hierarchy for pension and postretirement assets measured at fair value on a recurring basis as of January 29, 2011:


	Funded Plan
In thousands	Level 1		Level 2		Level 3		Total
Asset category:
Short-term investments	$	108,414	$	—	$	—	$	108,414
Equity Securities:
Domestic equity		83,793		—		—		83,793
International equity		37,016		—		—		37,016
Fixed Income Securities:
Corporate and government bond funds		—		25,968		—		25,968
Common/Collective Trusts		—		381,691		16,100		397,791
Limited Partnerships		—		—		10,609		10,609
Fair value of plan assets	$	229,223	$	407,659	$	26,709	$	663,591

The following table presents a reconciliation of level 3 plan assets measured at fair value for the year ended January 28, 2012:


In thousands	Common/Collective Trusts			Limited Partnerships
Balance as of January 30, 2010	$	19,817		$	7,779
Earned income, net of management expenses		(269	)		(416	)
Unrealized gain on investment		2,233			2,896
Purchases, sales, issuances and settlements, net		(5,681	)		350
Balance as of January 29, 2011		16,100			10,609
Earned income, net of management expenses		517			230
Unrealized gain on investment		1,427			2,291
Purchases, sales, issuances and settlements, net		(3,269	)		(1,088	)
Balance as of January 28, 2012	$	14,775		$	12,042

Pension plan assets are reported at fair value. Investments in equity securities traded on a national securities exchange are valued at the composite close price, as reported in the Wall Street Journal, as of the financial statement date. This information is provided by the independent pricing services IDC, Bloomberg and Reuters.

Certain corporate and government bonds are valued at the closing price reported in the active market in which the bond is traded. Other bonds are valued based on yields currently available on comparable securities of issuers with similar credit ratings. When quoted prices are not available for identical or similar bonds, the bond is valued under a discounted cash flow approach that maximizes observable inputs, such as current yields of similar instruments, but includes adjustments for certain risks that may not be observable, such as credit and liquidity risks. All bonds are priced by IDC, JP Morgan and Reuters.

The investments in the limited partnerships are stated at the fair value of the Plan's partnership interest based on information supplied by the partnerships as compared to financial statements of the limited partnership or other fair value information as determined by management. Any cash equivalents or short-term investments are stated at cost which approximates fair value. The fair value of the investments in the common/collective trusts is determined based on net asset value as reported by their fund managers.

The following is a summary of our target allocation for plan assets along with the actual allocation of plan assets as of the valuation date for the fiscal years presented:


				Actual Allocation for Fiscal Year Ended
	Target Allocation			January 28, 2012	January 29, 2011
Equity securities		50	%	44%	43%
Fixed income		50	%	46%	41%
All other—primarily cash		—		10%	16%

We employ a total return investment approach whereby a mix of equities and fixed income investments is used to seek to maximize the long-term return on plan assets with a prudent level of risk. Risks are sought to be mitigated through asset diversification and the use of multiple investment managers. Investment risk is measured and monitored on an ongoing basis through quarterly investment portfolio reviews, annual liability measurements and periodic asset/liability studies.

TJX also sponsors an employee savings plan under Section 401(k) of the Internal Revenue Code for all eligible U.S. employees and a similar type plan for eligible employees in Puerto Rico. Assets under the plans totaled $787.1 million as of December 31, 2011 and $776.0 million as of December 31, 2010 and are invested in a variety of funds. Employees may contribute up to 50% of eligible pay, subject to limitation. TJX matches employee contributions, up to 5% of eligible pay, at rates generally ranging from 25% to 50%, based upon TJX's performance. Employees hired after February 1, 2006 are eligible for participation in the savings plans with an enhanced matching formula beginning five years after hire date. TJX contributed $11.8 million in fiscal 2012, $13.9 million in fiscal 2011 and $13.3 million in fiscal 2010 to the employee savings plans. Employees cannot invest their contributions in the TJX stock fund option in the plans, and may elect to invest up to only 50% of TJX's contribution in the TJX stock fund. The TJX stock fund has no other trading restrictions. The TJX stock fund represents 6.6% of plan investments at December 31, 2011, 4.7% at December 31, 2010 and 4.5% at December 31, 2009.

TJX also has a nonqualified savings plan for certain U.S. employees. TJX matches employee deferrals at various rates which amounted to $2.6 million in fiscal 2012, $2.4 million in fiscal 2011 and $1.9 million in fiscal 2010. Although the plan is unfunded, in order to help meet its future obligations TJX transfers an amount equal to employee deferrals and the related company match to a separate "rabbi" trust. The trust assets, which are invested in a variety of mutual funds, are included in other assets on the balance sheets.

In addition to the plans described above, TJX also maintains retirement/deferred savings plans for eligible associates at its foreign subsidiaries. We contributed $5.8 million for these plans in fiscal 2012, $5.2 million in fiscal 2011 and $4.6 million in fiscal 2010.

Multiemployer Pension plans: TJX contributes to the National Retirement Fund (EIN #13-6130178) a multiemployer defined benefit pension plan under the terms of collective-bargaining agreements that cover union-represented employees. TJX contributed $10.8 million in fiscal 2012, $9.9 million in fiscal 2011 and $9.2 million in fiscal 2010 to the fund. TJX was listed in the plans' forms 5500 as providing more than 5% of the total contributions for the plan year ending December 31, 2010. The Pension Protection Act Zone Status of the plan is Critical and a rehabilitation plan has been implemented.

Postretirement Medical: TJX has an unfunded postretirement medical plan that provides limited postretirement medical and life insurance benefits to retirees who participate in its retirement plan and who retired at age 55 or older with ten or more years of service. During the fourth quarter of fiscal 2006, TJX eliminated this benefit for all active associates and modified the benefit to cover only retirees enrolled in the plan at that time. The plan amendment replaces the previous medical benefits with a defined amount (up to $35.00 per month) that approximates the cost of enrollment in the Medicare Plan for retirees enrolled in the plan at the time of modification.

TJX paid $217,000 of benefits in fiscal 2012 and will pay similar amounts over the next several years. The postretirement medical liability as of January 28, 2012 is estimated at $1.4 million, of which $1.2 million is included in non-current liabilities on the balance sheet.

The amendment to plan benefits in fiscal 2006 resulted in a negative plan amendment of $46.8 million which is being amortized into income over the average remaining life of the active plan participants. The unamortized balance of $19.9 million as of January 28, 2012 is included in accumulated other comprehensive income (loss) of which $3.8 million will be amortized into income in fiscal 2013. During fiscal 2012, there was a pre-tax net benefit of $3.4 million reflected in the consolidated statements of income as it relates to this post retirement medical plan.